Pejovich's book deals primarily with the consequences of institutional arrangements, and the book's strength lies not in an exhaustive survey of recent work but in a vivid, compelling, accessible, and often outstanding analysis of the role of incentives and transaction costs in economic life. The book provides intelligent people everywhere with a clear and reader-friendly introduction to the nature of economic systems.

In an effort to establish the link between institutions and wealth, the author examines how alternative institutional arrangements affect the costs of transactions and incentive structures and how costs of transactions and incentives influence economic behavior and economic outcomes.

My first impression was that the book was of mixed quality, including both brilliant and rather sloppy sections, and the underlying research at times appeared to be thin. Occasionally, I did not appreciate the book's spirit of advocacy, even as a strategy for winning converts. The pros, however, overwhelm the cons.

ECONOMIC ANALYSIS OF INSTITUTIONS AND SYSTEMS is a powerful essay that examines the consequences of incentives and property rights for economic activity. Pejovich has made a valuable contribution to redefining the field of economic systems by an intelligent discussion of the damaging effects on human society of perverse property rights and disincentives. Although the volume sometimes pastes over problems and weaknesses in systems based on private ownership, its emphasis on the relative merits of a decentralized market system based on private property fully justifies its existence.

Thráinn Eggertsson writing in THE INDEPENDENT REVIEW.